SSE profits soar on record power and gas prices

Power company SSE (SSE) has added big profits to its usual stable of big projects, big infrastructure and big debt. It has also promised a bigger spending programme that will go towards a more ambitious net zero programme in the wake of significant fossil-fuel-powered profits in the 12 months to 31 March, although this will result in a lower dividend. 

SSE saw its adjusted profit almost double in the 12 months to 31 March to £2.2bn, off the back of its thermal division’s £1bn higher operating profit, which was driven by record gas and power prices. 

The transmission and distribution business units together contributed £755mn in operating profit, split evenly, with a 3 per cent increase on last year driven by the distribution unit. Renewables also contributed to the higher bottom line through a 2 per cent higher operating profit. 

Debt remains significant, as per the business model, with net debt 2 per cent higher than in March 2022 at £8.2bn. SSE said its capital spending was at “record levels”, going largely to transmission and distribution and renewables projects. The massive Dogger Bank wind farm will start production this summer, although there has been a delay of a few months. 

SSE's final dividend for 2023 was announced as 67.7p, taking the total payout to 96.7p – a 12.9 per cent increase on the year before. This will be cut down next year, however, to a new base of 60p to “align future dividends with SSE’s ambitious growth profile”. 

The company has guided for 2024 adjusted earnings per share of 150p, down from 166p in the 2023 financial year, with gas and power prices dropping in recent months. Hold. 

Last IC View: Hold, 1,712p, 18 Nov 2022